Optimizing a Highly Sought After Technology Company
THE SITUATION: $6.6 MM revenue technology company is being actively pursued by investors. The owner wanted a valuation and analysis of the business through a buyer’s lens so he could understand the proper strategy to deploy in order to grow the company in a meaningful way that will increase value and marketability in anticipation of a future exit via a sale to a third-party.
Key Owner Questions
- What is the current mergers and acquisitions value of the business?
- How do I optimize the business to increase value and marketability?
- Do I need to increase value to meet my personal financial goals upon exit?
OUR APPROACH
Create an actionable Master Exit Plan® that will provide the owner with a benchmark value and optimization plan to meaningfully increase the business value ensuring that upon exit multiple buyers will be attracted into the process, driving price and terms.
- Valuation: We performed an in-depth quantitative and qualitative analyses to calculate the Enterprise Value of the business in the current mergers and acquisitions market. The valuation uncovered weaknesses that depressed value and business marketability. The valuation also served as a guide in developing a tax mitigation strategy for financial and estate planning purposes.
- Optimization Plan: The valuation identified opportunities for improvement such as expanding the leadership team, diversifying the customer base and increasing recurring revenue from subscription services. A growth strategy was identified with a supporting tactical plan to optimize the business to prior to exit.
- Post-Ownership Plan: The post-ownership plan identified the owner’s personal goals and financial aspirations based upon the anticipated liquidity when the business is sold.
- Personal Financial Plan: A financial plan was created for the owner which included the projected net investable proceeds from the sale of the business. The financial plan provided the owner with the necessary clarity to determine the EBITDA growth needed to sell the business in the future and meet his goals.
- Exit Strategy: Based on the valuation and their personal financial plans, the owners opted to hold and grow the company. They are currently executing the optimization plan and will exit via a sale to a third-party when the valuation goal that will fulfill their financial objectives has been met.
- Tax Mitigation and Estate Plan Review: A strategy to minimize taxes on the sale of the business was developed.
Result
The optimization plan to de-risk the company and increase value through revenue and margin growth is currently being executed. Revenue increased 56% and EBITDA 95% in the two years of activating their Master Exit Plan®. The company is currently focused on increasing subscription revenue which will drive the success of their transaction.
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